The decision-making process in a small organization is highly complex. Any decision may affect the organization as a whole, shareholders or any number of employees. The community may also experience the effects of some decisions, such as pricing increases or things that affect the environment. Hence, there are many elements that influence the decision-making process. However, the most important factor influencing decision making is the strategy or systematic process behind decision-making. This includes who will actually be making the decisions.

Setting up a System

Decisions are not made impulsively in small organizations. Decisions require a lot of thought and preparation. Managers must weigh various options and understand the outcomes of decisions. Therefore, most decisions are made in groups. The key is determining who should be involved in the decision-making process. For example, a decision about a new product may rest with those in product management, marketing research and finance. A marketing executive may oversee the decision-making. After determining the participants, a system must be established. Some companies use simple grid systems. Managers may, for example, discuss the various elements of a new car that are important to consumers: Price, design and comfort. They would then determine the sources needed to make their decision and individuals would be assigned specific responsibilities toward reaching that decision. There are other more complex decision-making models. But the key is maintaining a constructive environment and open mind, allowing everyone to contribute.

Generating the Best Alternatives

Small companies make most decisions by weighing options or alternatives. Business owners should start out by examining all possible alternatives when making decisions, including the option of doing nothing. Often, keeping things the way they are is the best option. For example, a retailer may continue selling an old product line because some customers still buy it. Contrarily, the best alternative may be a realignment of the business or the introduction of many new products. Whatever the case, the decision makers must weigh the benefits and risks of various alternatives before deciding on the best solution.

Checking the Decision

Small companies typically check or test decisions before fully implementing them. For example, a restaurant company may test a new design of a building by introducing it in several markets. Marketing managers can then track sales or obtain customer input to determine whether the new design positively impacts sales. A group of managers may run their decisions by executives and consultants to ensure they are not implementing a strategy that will hinder the organization. Consultants may have a better understanding of the marketplace so they can help advise in-house decision makers. Executives may be planning strategies that conflict with the decision being made by the managers. Hence, they may advise the management team to tweak their strategies.

Communicating the Decision

The decision should eventually be communicated to the organization, shareholders and other people involved with the company. Most major decisions are communicated in meetings. A management team may discuss the methods they used to make the final decision, touching on the possible outcomes of alternative solutions. The key during the communication process is providing a sound explanation for the decision. Managers should then encourage meeting participants to ask questions, such as other actions made necessary as a result of the decision.